UTB survey finds the Builders Finance Fund has failed to make an impression on development finance brokers

More than half of brokers operating in the field of Development Finance have no knowledge of the Government’s ‘Builders Finance Fund’ initiative.

The £525 million Builders Finance Fund is designed to help restart and speed up housing developments between 5 and 250 units that have slowed down or stalled. Its main objective is to address difficulties experienced by some housebuilders, particularly smaller developers, in accessing funding and to help bring forward stalled but viable sites.

However, according to recent research, carried out by United Trust Bank, 56% of development finance brokers who responded to the survey said they had not heard of the scheme.

Of those who were aware of the scheme, 77% welcomed it and thought it would help to move along viable developments and have some positive impact on SME builders. The remaining 23% felt that the funding wouldn’t necessarily go to proper SME builders.

When asked what the likely impact of the scheme would be on the UK housing shortage, 30% of those brokers aware of the scheme indicated that it would be of little or no help, 63% thought it would be of some help and only 7% thought it would help significantly.

Noel Meredith, Executive Director at United Trust Bank, commented;

“There wasn’t a huge amount of publicity surrounding the launch of the Builders Finance Fund (BFF) in April 2014 and clearly with more than half of development finance brokers having never heard of the scheme, more could have been done to raise awareness with this important audience.

“Like many people in the development finance industry, I’m yet to be convinced that the BFF will really provide support to true SME builders. The shortlist of bidders for funds includes names such as Taylor Wimpey, Countryside Properties and Morris Homes with multiple schemes of 100 to 200 units or more. These wouldn’t fit most people’s idea of an SME housebuilder or of developments which need Government assistance to get back on stream. My fears are that little of the £525m funding available will end up with the housebuilders who really need it.

“Leaving the BFF aside, there’s much that developers and brokers can do to increase their chances of finding funding through more traditional routes, such as from a specialist, development finance lender. Speaking for United Trust Bank, I can say that we have continued to increase our lending to SME developers by funding a variety of projects on sites around the country. Brokers can be of great value to developers in helping them to choose the most appropriate lender or lenders to approach and helping them to compile a professional and compelling proposal. If a developer can demonstrate that they have done their homework, fully considered the viability of what they’re proposing and are capable of delivering a successful development then specialist lenders like United Trust Bank will be very happy to talk to them.”